A new survey from the Iowa Association of Business and Industry finds three-quarters of the business members expect increased sales in the second quarter of this year — with the rest expecting them to stay the same.

ABI president, Mike Ralston, says more than half the businesses expect to add more employees. “The good news is that this is the second quarter in a row where we see this optimism, so hopefully it’s a trend,” Ralston says. He says businesses are seeing a lot of good things in the current economy to make them optimistic.

“Employment’s up, sales are up, revenue is up “You’ll notice in the survey there was a lot of talk about capital expenditures — so that’s always a great sign,” according to Ralston.

“Seventy-nine percent, almost 80 percent of the survey respondents plan to make a capital expenditures here in the second quarter of 2018. And that’s fantastic.” There are a couple of concerns amidst the optimistic figures.

“The first concern that we saw is one that we’ve seen for many years here in Iowa — and that’s people,” Ralston says. “…it doesn’t matter how big the company is, where it’s located or what industry it is in, everybody is looking for people. Hiring and being able to find enough people is still a concern.” The other concern involves the administration’s talk about trade issues.

“At ABI we believe more markets are good and free trade is good and there is a lot of concern about the president’s comments and actions related to trade and that sort of thing. So, that’s a concern too,” Ralston says. He says two key trade issues impact Iowa businesses.

“He’s been very aggressive on renegotiating NAFTA. NAFTA has been a huge positive for Iowa…and then to talk about steel tariffs on top or it. Our members are already seeing an increase in their costs. All of that is a real concern,” Ralston says. Ralston says they’ve expressed their opinions on the trade issues and can only sit back and wait. When it comes to finding workers — he says companies are trying all sorts of things to get people hired — including adjusting shifts and working hours.

“Maybe somebody’s going to work four hours in the morning and four hours at night and they want some time to do family stuff in between,” Ralston explains. “People are looking at split shifts, and I believe data shows wages are rising. All those are reflections of a tough labor market.” ABI is comprised of 1,500 member companies of all types and sizes in all 99 counties employing more than 330,000 Iowans.

An official with the beef production plant, which became the first to ship beef to China when that market reopened last summer, says sales to the country are going well.

Jerry Wiggs is the senior director of export sales and marketing for Greater Omaha Packing Company. “Like any new market, it has its challenges,” Wiggs said. “However, if I do a comparison of where I was in the first eight months of, say, shipping to Europe, compared to where we are eight months into shipping beef to China, we are probably a 1,000-percent more…shipping into China than what we were into the European Union.”

Many cattle producers in southwest Iowa supply animals to the Omaha facility. According to Wiggs, there’s great potential for U.S. beef in China because of its growing middle class population.

“I’ve been to China now three times in the last six months and it is amazing the growth that is going (on) over there,” Wiggs said. Mexico is one of Greater Omaha Packing’s biggest customers. Wiggs claims the disputes over NAFTA and the border wall, so far, have not hurt their business with Mexico. One of the company’s fastest growing markets for beef, according to Wiggs, is the Middle East – especially Saudi Arabia.

“The beef into Saudi Arabia – it’s been legal to ship there for a while, but they put up some regulations that a lot of the packers…aren’t willing to jump through some of these hoops,” Wiggs said. “A lot of times we’re willing to do what, say, a major beef packer may not be willing to do.”

The Greater Omaha Packing Company processes around 2,300 head of cattle per day and employs over 1,000 people. The company ships beef to all 50 states and 70 countries around the world.

The state unemployment rate was 2.9% in January. Iowa Workforce Development spokesperson Cory Kelly says that matches the December rate which had been adjusted upward after its original release.
“December was first reported at 2.8%, but was moved up to 2.9 part of the annual “benchmark process.”

January’s rate held steady after job increases in the “durable goods” manufacturing category. “We added the most jobs this month in that sector, up 1,100, much of that monthly gain was due to hiring in metal fabricating shops,” Kelly says. “Both durable and non-durable goods factories have steadily trended up since last summer and have been largely responsible for Iowa’s non-farm employment growth.”

December’s adjusted rate is the first time the unemployment rate has done up since August.
Kelly says it is worthy to note that Iowa “is the only state in the union in which manufacturing is still the number one industry. So, we’ve done a very good job of hanging onto our manufacturing core. So, they are doing very well.”

Kelly says retail lost the most jobs in January, and the industry lost more than expected.
“We’re down about 1,400. This sector has not fared well recently as consumers slowly shift away from our brick and mortar establishments, and instead are turning to online retail shopping,” according to Kelly.

There were some other areas that lost jobs. He says transportation, utilities and warehousing lost around 600 jobs — be he says the loses came after some large gains for those sectors in November and December.

Kelly says the last 12 months have been good on the job front. “Over the year we are only showing substantial loses are in construction, down 4,600 and then retail trade, 3,400,” Kelly says. “Up over the year, it goes back to manufacturing. Iowa expanded on it’s yearly growth in January and has been fueled by gains in durable and non-durable manufacturing. Combined these two industries have gained 11,000 jobs since last year.”

The number of unemployed Iowans decreased to 48,300 in January compared to 49,300 in December. The unemployment rate was 3.4% one year ago — and the U.S. rate was 4.1% in January.

The Iowa Supreme Court ruled today on how becoming a corporation impacts small businesses under the Iowa Civil Rights Act.

The case involves Joanne Cote, an employee of the Derby Insurance Agency in Sioux City from 19918 to 2014, who alleged she and other women were sexually harassed by her supervisor. The supervisor accused of harassment is Kevin Dorn, the husband of agency owner Patricia Dorn.

Patricia Dorn argued her company is exempt from the Iowa Civil Rights Act under a provision for companies with less than four employees. Most of her employees were family members, who are normally exempt from being not counted as employees.

Cote argued the company is a corporation and does not have family members and cannot qualify for the exemption.

The Supreme Court ruling says the justices are mindful that the legislature chose to exempt small employers from the Iowa Civil Rights Act to protect their freedom of association. But it says corporations do not have family members and the court must defer to the legislature to amend that provision if it chooses to allow small incorporated employers to omit the owner’s family members. The ruling upholds the district court and appeals court rulings that corporations do not have family members.

The Ankeny-based Casey’s convenience store chain reported a big increase in its third quarter earnings — but it was because of a tax cut — not a surge in sales. Casey’s CEO Terry Handley talked about the issue in a conference call with investors.

“Diluted earnings per share for the first quarter were five dollars, eight cents, compared to 58 cents a year ago. The third quarter benefited from a one-time adjustment in our deferred tax liabilities as a result of the Tax Cut and Jobs Act that became effective January first,” Handley says. He says earnings for the quarter without the federal tax changes would have been 48 cents a share.

“Year to-date diluted earnings per share adjusted for the tax reform were $3.20 — compared to $3.72 in the same period last year,” Handley says.

Gasoline sales continued to be strong, although they didn’t make as much profit as hoped.

“During the quarter we experienced an increase in wholesale fuel costs — primarily in the back half of the quarter — that had an adverse affect on the margin, resulting in an average fuel margin of 18-point-six cents for the quarter,” Handley explained. Sales of prepared food fell below expectations.

“Same store sales were up one-point-seven percent which fell below our annual guidance,” according toe Handley. “Over the course of the quarter, we experienced an increasingly competitive environment, both in pricing and promotions in our market area at a time when we had reductions in our advertising spend.” The company started a promotion in December that offered a discount on gas for every pizza purchased. Company chief financial officer Bill Walljasper says the promotion didn’t take off as well as expected, but it still had an impact on gas sales.

He says the pizza to the pump promotion put more focus on gas sales as the average gallons for each sale went up and that is directly linked to the promotion. Walljasper says the pizza promotion was slow to take off last time they tried it and they are hoping it will pick up this month. He also says some competitors matched the promotion and the pizza market continues to be tight with several companies offering discounts.

Freight trains that rumble through Muscatine up to a dozen times a day no longer blow their loud horns, thanks to a three-year effort to create a quiet zone in the heart of the eastern Iowa community.

City spokesman Kevin Jenison says the trains were rolling along at 45-miles an hour and the horns, which they were required to blow for safety reasons, were both distracting and deafening.

“The horns were a bit of a problem for local businesses who were trying to conduct their business and hold meetings,” Jenison says. “They would have to stop and wait for trains to pass.”

The trains pass through at all hours of the day, he says, and the noise was starting to impact the quality of life.

“We also have a growing residence downtown,” Jenison says. “More people are moving down there to live in the lofts that are being developed. It was a health issue for them. At least they would get a good night’s sleep if the trains weren’t blowing their horn.”

After three years of talks with federal officials, the state DOT and Canadian Pacific Railroad, the 1980s-era crossings for vehicles and pedestrians were upgraded with all-digital warning lights, gates, fences and barricades. Decreasing the noise level should mean an increase in the happiness of residents — and in their property values.

“There’s been several studies out there that indicate for every 10 decibels you drop it, you could potentially have up to a 5% increase in property values,” Jenison says. “The hope is that it’s going to ignite further investment in our downtown area and in neighborhoods that are within earshot of this quiet zone.”

The crossing upgrades were paid for by several community foundations and not the city’s taxpayers.

Muscatine is the 11th city in Iowa to get a railroad quiet zone. Others include Burlington, Cedar Rapids, Fairfield, Princeton and Sioux City.

An Iowa-based ag business is getting a new name next year. DuPont Pioneer will unify with DuPont Crop Protection and Dow Agrosciences to become Corteva Agriscience.

Jim Collins will be the division’s chief operating officer. “It’s an opportunity to unify three great businesses under one new name and establish a new brand in the industry,” Collins said.

Corteva is expected to become a stand-alone company in June 2019. “What that means is 100 percent of our 22,000 employees will wake up every day thinking about production agriculture and all of our resources, as a standalone pure agriculture company, will be focused on helping growers improve their productivity around the world,” Collins said.

Seed giant DuPont Pioneer is based in Johnston and currently employs about 2,600 Iowans.

According to Collins, the name Corteva means “heart” and “nature” and represents what the new company will try to create. “One that puts growers productivity at the absolute center of what we’re doing, but also focuses on consumers and the sustainability of agriculture going forward,” Collins said.

The merger was introduced two years ago and closed this past September. The new company will be headquartered in Wilmington, Delaware.

Tax reform and how it will affect the bottom line were topics addressed at Wednesday’s John Deere annual meeting in the Quad Cities.

Sam Allen, chair and CEO of Iowa’s largest manufacturing employer, was asked about the $900-million hit Deere reported in its first quarter earnings due to tax reform.

Deere spokesman Ken Golden says in the long run, the drop in federal taxes will be good for the company, for Deere dealers and for farmers.

“Each year until the new tax reform law went into effect, depreciation was an annual decision,” Golden says. “We saw customers waiting to make their decision on buying equipment based on what was going to happen to the law. The permanence is really what Mr. Allen was talking about in smoothing out this kind of impact that depreciation has on large equipment purchases.”

Deere opened the shareholders meeting with a video celebrating the 100th anniversary of entering the tractor business.

Tony Knobbe is one of the organizers of this year’s Gathering of the Green. He invited Allen and the audience to next month’s convention for John Deere tractor collectors. Knobbe is very proud of the theme the group selected — “Legend, Made Legacy.”

“If you look in their annual report, on the second page you’ll read, ‘The Hundred Year Legacy of the John Deere Tractor’,” Knobbe says. “And down here, it says ‘The Legend Runs On’. I know we didn’t steal it from them because this wasn’t produced when we produced our theme.”

During the meeting, Sam Allen quoted an old letter from a Deere board member. It was written before the company bought the Waterloo Gas Engine Company in 1918, and said, “The tractor will never replace the mule.”

Governor Reynolds with representatives of Iowa ABI, community colleges

The presidents of Iowa’s community colleges and the Iowa Association of Business and Industry have signed an agreement to “catalogue” the hands-on workplace training that’s available for students.

“Such as job shadowing, apprenticeships, internships, career coaching — just to name a few,” Liang C. Wee, president of Northeast Iowa Community College in Peosta, said this morning during an event in the governor’s formal office.

David Zrostlik, the president of Stellar Industries in Garner, is chairman of the Iowa Association of Business and Industry’s board of directors. He said the partnership aims to highlight the community college training programs that help students land one of the many jobs available in Iowa’s manufacturing sector.

“All of this is very important as we seek to grow Iowa’s workforce,” Zrostlik said.

Rob Denson, the president of Des Moines Area Community College, told reporters the best way for businesses to “prime the pipeline” is hire a student while they’re in college.

“It gives them an opportunity to understand what that career is really like, get to know a particular employer and, when they graduate…I call it a capture rate,” Denson said. “We have a very high rate of students who are going paid internships, staying with those companies.”

Governor Kim Reynolds said there is a “war for talent out there” and she’d like to see every community college student have the opportunity to learn in a workplace.

“But what we don’t have then is for individuals who go on to post-graduate training, whether it’s community college or a four-year institution,” Van Gundy says. “They are not getting that type of training and those are the types of individuals we need for the jobs in Iowa.”

To remedy the situation, Van Gundy says the Iowa Business Council is pledging to hire 30,000 interns and apprentices by 2025. She says the makeup of the state’s population is also a problem.

“We’re poor as far as demographics and diversity,” Van Gundy says. “In the state of Iowa, our population has not grown much at all and we are not a very diverse population, so in order to meet those job needs we have, we definitely need to grow our population in the state.”

By month’s end, Van Gundy says the council will introduce a Business Education Alliance made up of business leaders, higher education officials and K-12 representatives to map out strategies for current and future workforce needs.